May 9 (Bloomberg) -- Germany’s plan to cut solar subsidies
may see last-minute changes by a parliamentary committee as 16
states represented in the upper house and Chancellor Angela
Merkel’s government are deadlocked over the legislation.

Saxony-Anhalt wants the bill to be sent to an arbitration
panel at the next upper house meeting on May 11, according to
Reiner Haseloff, the state’s governor and a member of Merkel’s
Christian Democratic Union. Baden-Wuerttemberg, Thuringia,
Saxony and Brandenburg have demanded changes.

While the regional leaders and the central government are
still negotiating, “it’s realistic to expect a majority for
parliamentary arbitration,” Haseloff said in an interview
yesterday. “The planned cuts are detrimental to the many
companies producing in our region and we want a fundamental
revision.”

Governors are concerned that Merkel’s plan to reduce solar
incentives after an installation boom will put additional
pressure on domestic manufacturers such as Solarworld AG as
Chinese rivals led by Suntech Power Holdings Co. grab market
share. Four German solar companies including Q-Cells SE, once
the world’s biggest cell maker, have filed for creditor
protection since December.

Q-Cells employs about 1,300 people in Saxony-Anhalt and
Berlin. First Solar Inc., the biggest U.S. solar manufacturer,
said April 17 it would close its factory in Brandenburg that
employs about 1,200 workers by the end of the year.

Election Result

Merkel’s position in the Bundesrat was weakened on May 7
when her party suffered its worst result in more than half a
century in the state of Schleswig-Holstein after an election
that put the opposition Social Democratic Party within reach of
forming a coalition.

An offer by Environment Minister Norbert Roettgen, in
charge of support for the renewable-energy industry, to fund
more solar-energy research to soften the impact of subsidy cuts
won’t change Saxony-Anhalt’s position, Haseloff said.

“It’s positive in general, but won’t help the industry in
the short and medium term,” he said. Saxony-Anhalt wants more
support for solar installations sized between 10 kilowatts and
100 kilowatts, he said.

Brandenburg will vote for arbitration as it seeks to
reverse an elimination of support for large-scale solar plants,
Steffen Streu, a spokesman for the economy ministry in
Brandenburg, said by phone from Potsdam on May 4.

Jobs at Risk

Thuringia seeks less stringent cuts as they “threaten
5,000 jobs” in the eastern German state, its Economy Minister
Matthias Machnig said in an online statement.

Roettgen, responding to concerns that a surge in solar
installations was driving up the cost of electricity, is
planning monthly cuts for subsidies to match a decline in prices
for solar panels. The government argues that the industry will
have to live with lower subsidies.

“If enormous overcapacity exists in the solar sector, this
will lead to adjustments that we can’t and shouldn’t stop with
excessive subsidies,” Roettgen said April 25 in Berlin.

Critics of the legislation, which has been in effect on a
provisional basis since April 1 after lawmakers in the lower
house passed it in March, need 35 of the Bundesrat’s 69 votes to
send the bill to arbitration, according to Jost Huebner, a
Bundesrat spokesman. The plan will be approved if there’s no
majority for arbitration, Huebner said by phone yesterday.